For the quarter ended June 30, 2008, the net loss attributable to
common stockholders was $2,334,000, or $0.04 per share, compared to a net
loss of $1,209,000, or $0.02 per share, for the corresponding period in
2007. The second quarter 2008 net loss was impacted by non-cash expenses of
$560,000, which included share-based compensation, amortization, and
depreciation of $261,000, $269,000 and $30,000, respectively, whereas the
second quarter 2007 net loss included non-cash expenses of $405,000, which
included share-based compensation, amortization, and depreciation of
$119,000, $269,000 and $17,000, respectively.

Income Statement

Revenues for the second quarter of 2008 were $96,000, compared with
$119,000 for the same period last year. The decrease of $23,000 in revenues
is primarily attributable to a decrease in sponsored research of $35,000,
as the prior year revenue was non-recurring.

Total costs and expenses, including amortization and depreciation,
increased by $975,000 in the second quarter of 2008 to $2,508,000, as
compared with the corresponding period in 2007 where total costs and
expenses, including amortization and depreciation, were $1,533,000. The
overall expense increase is primarily attributable to increases in Research
and Development of $314,000 and increases in Selling, General and
Administrative of $648,000. The increase in Research and Development
expenses is attributed to additional costs in direct research for
Altrazeal(TM) related products of $35,000 and OraDisc(TM) related products
of $16,000, increases for our clinical testing programs of $53,000,
regulatory consulting and expenses of $66,000, and additional scientific
personnel costs, including share-based compensation, of approximately
$145,000. The Selling, General and Administrative expense increase was
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